Recently, at the Good Finance Summit, the biggest obstacle to the homeownership of young Quebecers aged 18 to 34 was highlighted. It is very difficult for Generation Y youth to raise the capital needed to fund the down payment for the purchase of their first home.
Value of the desired house
Usually, you have to find 20% of the value of the desired house. In the worst case scenario, you have to have your loan secured by ABC and for a pretty good premium, you get it with 5% down payment. As the median value of condos and houses continues to swell, even the 5% becomes inaccessible.
For a $ 240,000 condo, you need $ 48,000 (20%) of capital. Through ABC, the entrance fee will only be $ 12,000 (5%), but this loan insurance will cost you $ 8,208. This amount will be integrated into your mortgage and amortized according to the chosen term. You will understand that it will significantly increase monthly payments.
Stubborn real estate myths
To realize your real estate dream, you must stop deluding yourself.
“By paying a rent, I throw my money out the window! “
“You can own for an identical payment. “
“A condo is an investment. “
Housing is above all an expense
Assertions of this kind are full of lies or exaggerations. Here’s the reality: housing is above all an expense! Unless you sublet, your purchase will yield very little capital in the long run. Finally, in Quebec, according to the Federation of Real Estate Boards (FCIQ) including the down payment, it costs on average 60% more to own a home than to rent it. This EXCLUDES property and school taxes, renovations and extras of all kinds.
So, we understand that to afford a residence you must have solid loins.
Your plan to save $ 22,000
To save $ 22,000 in three years, you will need to be disciplined. Follow the steps below and you will succeed.
-Pay all your credit card debts
– Establish a tight budget and stick to it
-Make a plan for two. With 2 salaries, it’s going faster
-Determine your target price and systematically save each week $ 50 each
-Prevent a sum for unforeseen (5% additional)
-Start an automatic debit plan in a moderate quality portfolio. Identify first quartile and / or 4 and 5 star Morningstar funds.
-So RRSP and HBP
-Take your RRSP tax return (after deduction) and put it back in a TFSA
– Target developers and municipalities that offer home ownership promotions and incentives. This can take the form of a tax rebate, a return of capital, or a small down payment.